Non tax-advantaged share option schemes

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance

Non tax-advantaged share option schemes

Produced by a Tolley Personal Tax expert
Personal Tax
Guidance
imgtext

Summary

As with any other discretionary option plan, a non tax-advantaged share option plan involves the granting of a specific number of options to an individual. These options provide that the individual can, at an agreed date or point in time, acquire a given number of shares (the underlying shares) for a fixed price. These share schemes used to be known as ‘unapproved’ share option plans.

Given that there is both no up-front cost to acquiring the options and no requirement for the individual to pay over any monies unless the underlying shares increase in value, there is little risk attached to the receipt of options. As a result, the tax treatment and tax rates applicable will often appear to be very similar to cash bonuses.

Key considerations

Grant of options

The terms of the options need to be set out in a suitable legal document known as ‘the Rules’. The Rules govern all pertinent matters between the company and employee and, given the tax complexities that can occur in such arrangements, a suitable and up

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Powered by Tolley+

Popular Articles

Gifts out of surplus income

Gifts out of surplus incomeA valuable exemption from inheritance tax (IHT) applies to gifts out of surplus income. This exemption applies only to lifetime gifts and is therefore a key part of lifetime planning. The exemption applies to both outright gifts and gifts into trust. Gifts which meet the

14 Jul 2020 11:48 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more Read more

Temporary differences

Temporary differencesCalculation of temporary differencesThe temporary difference arising in respect of an asset or liability is calculated by comparing the carrying value of that asset or liability with its tax base.IAS 12 uses the concept of taxable or deductible temporary differences. Whether a

14 Jul 2020 13:49 | Produced by Tolley in association with Steve Collings Read more Read more

First year allowances

First year allowancesFirst year allowances (FYAs) are available on the following items:•first-year relief on qualifying new main rate plant and machinery (at 100%, which is described by HMRC as ‘full expensing’) and special rate assets (at 50%) from 1 April 2023 (companies only). These FYAs were

14 Jul 2020 11:41 | Produced by Tolley Read more Read more